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Here's an example of a market segmentation exercise in "opportunity matrix" form. Even if you do this on the "back of a napkin," using educated guesses and no weighting it will help you think through...Read More »

I hope my PR friends won’t hate me after this post, but the point needs to be repeated: Startups should not hire PR agencies. It seems not a week goes by without hearing about young companies blowing huge wads of cash on “marketing” they’re not ready for. Some entrepreneurs get in this fix because they fail to distinguish between PR and other marketing tactics. They know intuitively or are told they ‘need marketing,’ but the first thing they think of is PR. As I’ve mentioned before, PR <> Advertising <> Word of Mouth <> Social Media, etc.

Before you hire a PR agency or even consider PR, the first thing you need to understand is what you are trying to accomplish, what is your objective. Second, you should consider whether that objective is right for the stage of your business. If you are an early startup, pre Product-Market fit, or even pre “Sales and Marketing Roadmap,” you should not hire a PR firm.

I attended the most recent Startup2Startup event and after the presentation, the discussion turned to how one might define Product-Market Fit and what might serve as a proxy for Product-Market Fit, given various types of business models.

The Sean Ellis 40% rule-of-thumb was quickly invoked as were other ideas. However, I thought it worthwhile to share one insight that came from an experienced start-up entrepreneur at the table. While we were talking about triangulating on the various signals available to an entrepreneur as to what constitutes Product-Market Fit, he recounted a story -- really an accidental natural experiment -- on how he unequivocally learned his start-up hadn't achieved Product-Market Fit.

To wit, his site had gone down for a few hours, and he hadn't known about it. In the interim, there had been nothing but silence. None of his users had squawked or had made it publicly known that the site was down and they were angry/frustrated/furious/going to switch providers/fed-up-with-this etc., etc.

This lack of frustration/noise is a data-point. In this case, it meant his start-up had a ways to go on iterating to finding Product-Market Fit.

As a contrast, we might choose to look at what happens when Twitter goes down.

So, for the more intrepid of you out there, perhaps try "accidentally unplugging" your servers and see what happens. (Clearly, this has significant risks such as alienating users, but it may be a useful signal to know when you don' t have Product-Market Fit, if you were wondering.)

BTW, I believe Dave McClure has advocated a very similar idea with regard to features. If I recall correctly, he suggests removing features from a web app and waiting to hear if users complain loudly. The intensity of the complaint is likely correlated with the usefulness of the feature.

In Andrew Chen’s recent post, “Does every startup need a Steve Jobs?”, he discusses IDEO’s “product framework for Desirability, Feasibility, and Viability.” Chen’s descriptions of business-, engineering-, and design-focused product perspectives reminded me of the work on companies’ “driving force” popularized by Michel Robert in his series of business strategy books. Understanding your “driving force” is critical to understanding what products to build and who to build them for. The driving force helps shape technology choices, importance of design, market segment, and business model as well as company culture, growth plan and exit strategy.

The basic point, is that while all companies employ technology, sell products or services, employ technology, market to specific segments and use certain distribution methods, one factor dominates (or should dominate) the others in terms of business strategy.

one component of the business is the driving force of the strategy — the company’s so-called DNA. This driving force, in turn, greatly determines the array of products, customers, industry segments, and geographic markets that management chooses to emphasize more or emphasize less

Three beautiful words. When used together, one of the most wonderful — if not most underused — phrases in our lexicon. Am I being hyperbolic?

Modern culture dictates that we claim to know, so we spend a lot of time knowing stuff. We expend much effort displaying our expertise. If we personally don’t know something, we rely on designated “experts,” who tell us they know (despite their unimpressive track record). We know where the stock market is headed. We know how countries will respond to “liberation.” We understand the ins and outs of other cultures. In relationships, we do not hesitate to state unequivocally the others’ thoughts, intentions and motivations. At some point in the past, we have “known” the world is flat, the sun revolves around the Earth and that spontaneous generation exists. Collectively, we know both that “God Exists” and that it doesn’t. We know that the people in our tribe are more intelligent, moral, and civilized than in theirs. Of course, they say the same thing.

I don't know who is more exasperated, entrepreneurs flummoxed by marketers or me, upset that another entrepreneur has been flummoxed by marketers!

People, language is for communication and marketing terms, abused as they are, fall somewhere within the scope of language. To communicate you need to learn the terms. To practice marketing or to hire a marketer you need to grasp some basics. Please.

A technical CEO learning marketing is the equivalent of a sales/marketing CEO learning development engineering.

Not.

I am not a developer. If push comes to shove, I can code in PHP, or develop shell scripts, and truth be told, I did take a couple of ECE courses in college; courses which inexorably told me I was not going to be a developer.

My path to becoming a marketer was unusual, I think, which has had both its advantages and disadvantages. I like to think I'm a "technical marketer," rather than what I call a "Madison Ave" marketer; not to dis the later, since they have their role to play in the grand scheme of marketing. By technical marketer, I don't mean one who only markets technical products, or who does only "product marketing" in the industry vernacular, but rather a marketer who uses processes and actionable metrics to achieve near term business objectives that lead to realizing company vision.

Everyone has heard of the "elevator pitch" and all entrepreneurs know they need one. Right? I'm talking about the ability to tell your business story in the time it takes the elevator to get the floor where your audience will egress. While everyone knows they need one, the confidence imbued in entrepreneurs -- necessary to be an entrepreneur -- often results in the overconfident belief that the pitch will magically flow when the time comes.

While I'm sure this sometimes works, the strategy is a mistake. Read More »

The toughest part about practicing customer development is getting started. You already know that customers are not going to magically find you because you have a great product, work hard and are good looking. Now that you've realized how big the world is and that using a megaphone from your roof top is a poor method of user acquisition, what's next?

Presumably if you are committed to the principles of customer development, you are already committed to "getting out of the building." Before you can interview potential customers, however, you have to find potential customers to interview. Unfortunately, there are no magic bullets. This is painstaking work. Just as with other portions of the customer development model, to find early adopters you make assumptions, test, and iterate. If you are having trouble getting started, try these steps: Read More »

I've been working in technology for a pretty long time, having weaved my way along an illuminating path through development, IT, project management, product management, product marketing, marketing and executive leadership.

The two key principles that tie the threads of my career together are customer development and project management. (One could probably look at all of life this way, too.)

Two epochal moments happened in my career at one company, Tumbleweed (now part of Axway), that helped me consciously acknowledge these two principles.

I learned from CFO Joe Consul that what I had been doing for years was actually called project management. (Yes, some of us are slower than others.) I was able to structure and formalize what I was doing, which allowed me to become more efficient, teach others, scale, etc.

I learned from marketing that although I was an IT Manager, my views on how to sell to IT Managers (our target market), was not necessary.

(I should mention a third moment, because it was a pivotal for my learning. I learned from CEO Jeff Smith that passion is a key (though not sufficient) ingredient to success. Jeff was out to change the world and he in infected us with his enthusiasm.)

Tumbleweed was an interesting ride; it reached the highs and suffered the lows that all businesses that last 10+ years endure. A lot of mistakes were made, and a lot of lessons learned. There were many success stories, too, and, unsurprisingly, lessons learned there, too. I saw evidence of certain elements of Geoffrey Moore's Chasm, as well as in retrospect, a lack of customer development.

Not to fault anyone, but the late 90s saw a lot of customer defumblement.

Steve Blank's presentation of Customer Development is persuasive. Eric Ries' Lean Startup, combining customer development and agile development principles is even elegant.

The simplicity of necessity masks the complexity of execution.

Whether internal or external, formally defined or not, no matter what you are doing, you have a customer. Whether explicitly defined or not, you also have at least one objective associated with your customer, e.g., make them happy, accept their money, increase their market share. To reach objectives, you must execute on a carefully-crafted plan; a carefully-crafted plan that you must defenestrate the moment you conclude it doesn't work. Hopefully your plan includes post-defenestration steps.

Steve Blank @ startup2startup joked that, to put it mildly, The Four Steps to the Epiphany, is a difficult read. But customer development isn't hard because Blank's book is difficult to read. Customer development is hard because the answers to the questions that will test your assumptions are difficult to come by. As any project manager who has ever had to "gather requirements" knows, customers don't know what they don't know.

The customer is not always right, but they do have the last word.

It's your job to empower and persuade customers to act in a way that achieves your objectives for them. But how do you know how to get them to act? You can guess. You can hard sell. You can ask. You can lie.

If you go about empowering and persuading the wrong way, you will lose your customer. You will lose your customer because of some combination of:

You never actually located your customer.

Your objectives for the customer were not clear.

Your tactics for achieving the objectives did not match the customer's behavior.

Your process for "listening" to the customer was wrong or incomplete.

You failed to execute.

A disciplined approach for web-based products allows for faster learning, but for "offline" products, customer development is a particularly meticulous and time-consuming process.

Here are some customer development hurdles entrepreneurs and executives need to overcome: